Meadowbrook Insurance bank lenders waive defaults through Sept. 20

By Angela McDaniels

Tacoma, Wash., Aug. 23 - Meadowbrook Insurance Group, Inc. has obtained a waiver from the lenders under its bank credit facility on some defaulted loan covenants, according to a company news release.

The company was in default on two of its financial covenants under the facility as of June 30, including its net worth covenant. The defaults were triggered by an after-tax non-cash goodwill impairment of $101.5 million the company recorded in the second quarter that directly impacted its book value.

The waiver is effective until Sept. 20 and includes specific authorization for the company to pay its common stock dividend as scheduled on Monday.

The company said it is progressing in its discussions with its lenders to reset the covenants to reflect the impact of the goodwill charge. The company expects to execute and announce an amendment to the facility in the coming weeks.

"We are continuing to work with our bank group to negotiate an amendment to the credit facility to adjust the financial covenants. Absent the non-cash goodwill impairment, we would have been in compliance with all of our financial covenants," chief financial officer Karen Spaun said in the release.

Meadowbrook, based in Southfield, Mich., is a risk-management organization that specializes in specialty risk management solutions for agents, professional and trade associations and small to medium-sized insureds.

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